Failure to Declare the Amount of Cash at the Time of Crossing the EU Border – the Case Law of the Court of Justice of the European Union and the Amendment to the Bulgarian Criminal Code

13_Failure to Declare the Amount of Cash at the Time of Crossing the EU Border_ME[english]

In September 2015, the Criminal Code (CC) of the Republic of Bulgaria was amended in relation to the infringement procedure No 2012/2085 opened by the European Commission due to Bulgaria’s failure to implement Article 63 of the Treaty on the Functioning of the European Union (TFEU). The procedure referred to Article 251 of the Criminal Code, which established the criminal liability for any infringement of the regime of transactions, imports, exports, or any other activities involving cash assets or for failure to fulfill the obligation to declare them, together with the sanctions, where the object of offence was in a particularly large amount. The punitive sanctions and the confiscation of property in all cases of failure to declare, including the cases at the EU internal borders, which the Bulgarian authorities maintained, were considered to be inappropriate and disproportionate to the public interest.

In accordance with the wording of Article 251 CC which was in force until 26 September 2015, a person who had violated a provision of a law, an act of the Council of Ministers, or a promulgated act of the Bulgarian National Bank concerning the regime of transactions, imports, exports, and the obligation to declare them, where the object of offence was in a particularly large amount, was to be punished by imprisonment of up to six years or a fine equivalent to double the value of the object of offence.

The latest amendment to that provision, which was promulgated in The State Gazette, No 74 on 26 September 2015, incriminated only the failure to declare the amount of cash at the border of the country, where it was an external border of the European Union. Hence the failure to declare the amount of cash at the EU internal borders would entail only an administrative penalty instead of a criminal law sanction coupled with confiscation (as outlined in the explanatory memorandum of the bill). In accordance with the amending bill to the Criminal Code, a proposal was made to introduce a legal definition of the term “a particularly large amount” under Article 93 CC in conjunction with the amendment to Article 251 CC but the legal definition proposed in the bill was not approved and therefore in was not included in Article 93 CC.

On the other hand, the wording of Article 251 CC implements Bulgaria’s obligation under Article 9 of Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community. In accordance with Article 9 of the Regulation, the penalties to be applied in the event of failure to comply with the obligation to declare amounts of EUR 10 000 or more when entering or leaving have to be “effective, proportionate and dissuasive”.

The Court of Justice of the European Union issued its judgment of 16 July 2015 on case C‑255/14 on the basis of a reference for a preliminary ruling on Regulation (EC) No 1889/2005 concerning the controls of cash entering or leaving the European Union, the obligation to declare, infringement, penalties, and proportionality. The Court recognized that a fine of 60 percent of the amount of undeclared cash was disproportionately severe, insofar as it went beyond necessary to in order to ensure compliance also in the light of the seizure of the entire undeclared amount. The Court ruled that Article 9(1) of the Regulation had to be interpreted as precluding national legislation, which imposed payment of an administrative fine, the amount of which corresponded to 60 % of the amount of undeclared cash, where the sum was more than EUR 50 000 (paragraph 35 from Court of Justice of the European Union judgment of 16 July 2015 on case C‑255/14). Article 251 CC envisages payment of a fine, the amount of which corresponds to 200 % of the amount of undeclared cash, where the sum is in a particularly large amount, i.e. 140 minimal wages or EUR 27 200. The Bulgarian case law and, more specifically, Interpretative Judgment No 1/1998 of the Supreme Court of Cassation (SCC) spells out the criteria for the object of offence to be considered to be “in a particularly large amount”. The SCC ruled that, unless the law prescribed otherwise, the criterion for the qualifying characteristics of “large amount” and “particularly large amount” was a cash equivalent of the object of offence exceeding seventy or one hundred and forty times of the minimal wage for the country respectively.

The Regulation is a binding legislative act which is applied directly in its entirety in all EU Member States. Hence the penalty has to be effective, proportionate and dissuasive. The establishment of a single Community model of penalties for failure to declare cash at the EU external borders vis-à-vis the provisions of Bulgaria’s Criminal Code is related with a possible reference for a preliminary ruling of the EU Court of Justice on the amount of the penalty under Bulgarian laws.